Fears and Loathing (and Pain) in Seattle: a Case Lesson in How NOT to Preserve and Produce Email – Part One

A recent case in Seattle provides a text-book example of how not to do e-discovery. It concludes with a sanctions order against the defendant, and the defendant’s law firm, Payne & Fears LLP. The law firm was fined $10,000, payable to the court, due to the conduct of two of its attorneys. The defendant, Corinthian Colleges, was fined another $25,000. Knickerbocker v Corinthian Colleges, Case No. C12-1142JLR, (WDWA, April 7, 2014).

How does a sanctions disaster like this come to pass? And in such a laid back city like Seattle? The court awarded sanctions because of a failure to preserve and a subsequent delay in producing evidence. Note that I did not say sanctions for a loss of evidence, only delay. The ESI at issue in the sanctions motions was the email of three of defendant’s former employees. They were the plaintiffs who were now suing Corinthian for alleged racial discrimination, harassment, and retaliation. Corinthian’s attorneys eventually found and produced the email from back-up tapes, but it was an ordeal to get there. The court got the distinct impression that the attorneys involved for the employer were not playing straight, that they were attempting to hide the ball.

Digging a little deeper into this 27-page Order, which is replete with facts, as all good sanctions orders are, we see a series of bad decisions. The decisions were all made by the attorneys for the defense. It would take me another 27-pages to review them all in detail, so I will just examine the segments that seem to me to have the most instructional value. (It is still going to be a two-part blog, even without these details!)

After you hear the story, and hopefully also read the opinion itself, you be the judge as to whether these bad decisions were just incompetence on the part of these attorneys, or actual bad faith. I will include a poll at the end of each segment where you can anonymously vote. The judge clearly thought it was bad faith by Pain & Fears’ attorneys. But, who knows for sure (aside from the attorneys themselves). It is often hard to tell the difference between dishonesty and incompetence, especially if all you know about the case is what you read in one court order.

The first bad mistake made in this case was the defendant’s failure to issue a litigation hold. The specific facts surrounding this failure are interesting, so too are they way they came out. Maybe they tell a story of stupidity, or maybe intent to hide? Again, you be the judge. Personally, on this first error at least, I am inclined to think it was just a lack of knowledge and understanding. But I readily admit I could be wrong. Maybe they did not issue a hold because they wanted incriminating email to be destroyed. Naturally, that is what the plaintiffs’ alleged.

The facts of the no-holds bar (not a typo, think about it) were clarified during an evidentiary hearing on the plaintiff’s first motion for sanctions. Most of the clarification was attained by the judge’s questioning of the Payne & Fears attorneys themselves, and not the witnesses they had brought with them.

When a district court judge decides to quiz legal counsel about something he is curious about, you had better respond fully and truthfully. This is the same judge who is going to decide whether to sanction your client for misconduct. The compulsion to speak is especially strong in a situation like this where the other side is urging a sanction against your client for hiding the truth. Do you want to dig your hole even deeper to be buried in? No. The Payne & Fear attorney at the hearing, Jeffrey Brown, had no choice but to answer the judge as best he could.

The District Court Judge, James L. Robart, a wise and sage judge if there ever was one, cut to the chase and asked Jeffrey about the litigation holds. No doubt Jeffrey was nervous when he heard the question directed to him. He was looking up at Judge Robart in black robe several feet above him on his bench. I am pretty sure the Judge was not smiling like we see him in this photo. Jeffrey knew that the Judge would not like the answer he was about to give. He was right about that. Here is Judge Robart’s account of this exchange from the opinion:

At the hearing, Jeffrey Brown, counsel for Corinthian, admitted that, although Corinthian had issued litigation holds in previous litigations, Corinthian did not issue a litigation hold with respect to this case. (12/12/13 Trans. at 4-5.) Mr. Brown represented that, instead of issuing a company-wide notice, Corinthian had hand-selected certain employees and requested that they retrieve and retain relevant documents. (Id. at 5-7, 12, 18.)

Note the use of the word “represented” in Judge Robart’s account of Jeffrey’s response. It is a term of art, a kind of word you use when describing fraud. This is still early in the opinion, but experienced case law readers knows this is a set up word for things to come.

As we will see later when discussing other e-discovery blunders in this case, Mr. Brown quickly became a favorite target of Judge Robart’s questioning. His opinion is filled with quotes from poor Jeffrey. No doubt he acquired a major headache in that courtroom.

Here is Judge Robart’s summary of the defendant’s preservation mishaps (emphasis added and numerous citations to the record omitted):

Corinthian has issued litigation holds in previous actions. Nonetheless, for this case, Corinthian only requested that a subset of employees, whom it deemed to be “key” witnesses, search for and save relevant documents. Testimony by some of these “key” witnesses, however, casts doubt on Corinthian’s claim that these employees in fact performed any—let alone a thorough—search for relevant documents. Specifically, Ms. Austin and Ms. Paulino testified that they did not search for documents relevant to the litigation, and Ms. Givens and Ms. Phillips testified that they did not recall searching for documents.5 Such self-selection of a limited pool of discovery materials, combined with doubt as to what searches, if any, were performed of this pool of materials, gives the court no confidence in the quality of Corinthian’s discovery production. Yet, due to the lack of a litigation hold, it is not clear that the current additional discovery period, instituted 18 months after Plaintiffs filed suit, can remedy this deficiency.

So much for the corporation’s litigation hold procedures in this case. Turns out that the deposition testimony contradicted the representations made by Mr. Brown to Judge Robart as to his hand-selection of certain employees and request that they retrieve and retain relevant documents. These same witnesses testified that no one told them to search for anything, and they had not made a search. This suggests that the representations made to Judge Robart were not accurate. In fact, they seem down right misleading.

Not good. Not good at all. Perhaps now you understand the fines against the attorneys. But wait, there is more. An even bigger mistake was allowing all of plaintiff’s emails to be deleted from the corporation’s Exchange server after the case started. No doubt the judge was beginning to believe the plaintiffs’ allegations that the employer allowed the plaintiffs’ emails to be destroyed on purpose because they knew the content would harm the defense. But before we move on. What do you think? Did the employer not institute a litigation hold on purpose so that they could get away with destroying incriminating evidence, or is this just another case of lawyer incompetence?

The facts on this alleged destruction were cloudy and contradictory at the time of the first hearing. So, once again, what did Judge Robart do? That’s right, he turned to defense counsel and asked him if it was true, had his company deleted all of the plaintiffs’ email as plaintiffs’ allege. Here is Judge Robart’s later findings on this issue, which, once again, relies extensively on the responses of Mr. Brown to his impromptu questions:

First Corinthian’s counsel, Mr. Brown, conceded that Plaintiffs’ email boxes were in fact deleted pursuant to this practice. (“With respect to the plaintiffs’ email boxes, no, your Honor. Those emails exist on the backup tapes, but those email boxes were deleted per the policy that Mr. Banash explained to you.”) Mr. Brown also conceded that the deletion of Plaintiffs’ emails occurred after Corinthian received Plaintiffs’ EEOC notices:

If you put an order in that says delete the mailbox in 30 days, should somebody have spotted the EEOC charges and made the connection and gotten around and suspended that? That’s something I can’t argue. That is something that we have looked at. Yeah, we have to find a way to fix that system, your Honor. I cannot sit here and tell you that is the best way to do things.

Mr. Brown also explained that no other document destruction program was in place at Corinthian. Although Plaintiffs pointed to a Corinthian document purporting to establish a six-month automatic email deletion policy, the policy was apparently never implemented. Plaintiffs claim that Mr. Ruiz represented that the reason Corinthian had produced so few emails was due to the alleged six-month deletion policy; Corinthian disputes that Mr. Ruiz ever made such a representation.

Another big mistake was conceded by Mr. Brown. The plaintiff’s email was deleted after Corinthian received Plaintiffs’ EEOC notices. That means after a duty to preserve was triggered. He has just admitted a breach of duty. He has admitted spoliation. But he has a fall back argument, only that argument puts the credibility of other Payne & Fear attorneys at issue.

Mr. Brown was now arguing that the destruction of the email after notice was a harmless breach of duty, because, after all, there is a complete backup copy of all of the plaintiffs’ email. Did Mr. Brown forget that other attorneys in his firm had previously said they could not produce plaintiffs’ emails because the employer did not have them? They claimed that the emails were all destroyed in the normal course, and so the destruction was protected from sanctions by Rule 37(e). After the judge put Mr. Brown on the spot, and grilled him on his poor job of preservation, Mr. Brown responded by saying how easy it will be to just produce the emails off of the backup tapes. That reminds me of one of my favorite deposition questions: “Were you lying then, or are you lying now?“

Judge James Robart, who has been a lawyer since he graduated from Georgetown in 1973, and a District Court Judge since his nomination by President Bush in 2004, knows a fair amount about IT. He was a member of the Ninth Circuit IT Committee from 2007 to 2009, and chief judge in 2008. I suspect Judge Robart knew a lot more about technology than any of the attorneys in this case, although they apparently did not know that.

Judge Robart analyzed the different things that he was being told by the attorneys for the defendant and reached this considered opinion:

Corinthian’s attempt to influence (if not misdirect) the court with such unsubstantiated information falls below acceptable standards of professional conduct.

In case you did not know it, that’s polite judge-speak for much stronger thoughts and condemnations, including my favorite deposition question.

Back to defense counsel’s fall back argument, that no harm was done because of the backup tapes, Judge Robart deals with this position in his sanction’s Order by again relying on counsel’s own words:

Specifically, Mr. Brown averred that:

First of all, there are backup tapes that have every single email that has been referred to on them. Every single day that Corinthian has operated in Bremerton there are backup tapes with those e-mails. Everything we are talking about in this motion has been preserved and is available.

The problem with this position, as the judge knew full well from study of the record, is that defendant never searched these tapes for the email. They never searched, even though another Pain & Fears lawyer had previously filed a certification with the court stating that:

Corinthian, at its own expense, conducted a full and complete search for all documents responsive to Plaintiffs’ Requests for Production Nos. 1, 2, 3, 4, 5, and 27 (subject to any and all objections and limitations previously agreed to by the parties) on all available electronic sources and/or servers . . . .

Judge Robart later found that this verification was, in the judge’s words: incorrect in that Corinthian’s backup tapes were not searched, despite the fact that Plaintiffs had not agreed that the backup tapes were not “available.”

Obviously the lawyers were getting a little too cute with the use of the word available to try to justify their hiding the fact that they had these emails on electronic sources, namely backup tapes, but did not search them.

This kind of squirmy behavior never goes over well with a judge, any judge, but especially not a U.S. District Court Judge like Judge Robart. He had long experience with complex litigation in Seattle, coupled with recent experience with IT. Believe me, a judge like that can handle the truth, the whole truth, and nothing but the truth. So that is what you had better give him, and you had better give it to him straight.

Here are Judge Robart’s words, where he once again quotes the words of Mr. Brown. Note how he begins each paragraph by invoking his name. (Again I am deleting the many citations to the record.)

Mr. Brown took the position that the Stipulated Order’s requirement for a “full and complete search” that “shall include documents on backup servers” did not extend to documents kept on backup tapes, because “[t]he tape is an entirely different ballgame from the servers.” (testimony by Mr. Banash confirming that Corinthian has both backup tapes and backup servers).) Plaintiffs’ counsel, on the other hand, claimed that they were not aware that Corinthian intended to draw a “distinction between backup servers and backup tapes,” and that they understood the Stipulated Order to refer “generally to backup media.” Similarly, with respect to the Verification of Compliance, which affirmed that Corinthian had searched “all available electronic sources and/or servers,” Plaintiffs maintained that they had not agreed that the backup tapes were not “available.”

Mr. Brown emphasized multiple times that accessing the information on the backup tapes would solve the spoliation problem facing the court: (paras added for ease of reading)

MR. BROWN: And the answer is lying right under our noses. We brought it up in April. We can go get those tapes. If there is something supposedly in Michelle Paulino’s mailbox, we can look at it. . . . We can do that. A thousand dollars a day and it is here and we are done.

THE COURT: Is it your position, sir, that that is not an intentional deletion of information once you are on notice of litigation?

MR. BROWN: Your Honor, number one, that is my position, because the emails exist on the backup tapes. And we can get them. . . . I know those things are still there. I can tell you, it is about a thousand dollars per day of recovery time. It can be done. It is sitting there.

Mr. Brown represented to Judge Robart during the hearing that the cost of retrieval of plaintiffs’ email from backup tapes would not be as expensive as Judge Robart feared. I wonder how Mr. Brown knew that, or thought he knew that? I suspect he just got carried away in trying to defend his client. Anyway, here is more Q&A between Mr. Brown and Judge Robart on the topic. You be the judge.

THE COURT: You are sitting here telling me over and over and over again, we have the backup tapes, it solves the entire problem. I don’t know if we can go back to 2004, but that would be, what, 365 days a year times ten years at $1,000. . . . Corinthian is going to have a very large bill.

MR. BROWN: The one day is a snapshot, though. For example, if you asked how would the world be different if we had sent a litigation hold that stopped the deletion of one of the plaintiffs’ emails, all we need—you can look at the termination date and get the backup tape for that date, and now you have got their email box exactly how it existed as of the date of their termination. It would be perfect. It would be one day, $1,000. If you wanted that for ten employees, then you get to $10,000. You don’t have to do it as separate days, because it is cumulative.

THE COURT: I think what I want it for, sir, is every employee of Corinthian, because I have no confidence in your search. . . .

MR. BROWN: . . . With respect to every employee, if you are looking at every employee at the Bremerton campus where this occurred, we can do that, your Honor. It can be done. We are not going to have to pay individually for each employee. If the backup tape for one day—That is across the whole campus. We can capture everybody that way. . . .

Judge Robart decided to accept the representations of Mr. Brown that recovering data from the backup tapes “would be perfect. It would be one day, $1000.” For that reason Judge Robart deferred ruling on Plaintiffs’ first motion for sanctions. Instead, he issued an order compelling defendant to “retrieve from the backup tapes all employee email accounts as they existed on or near the date that the last Plaintiff’s employment was terminated” and to “search the retrieved information according to the terms articulated in the parties’ stipulated order.” Because the parties’ trial date of January 6, 2014, was looming in less than one month, the court set a deadline of December 20, 2013.

As it turned out, and, as I dare say, could not have been overly surprising to the IT sophisticated Judge Robart, the defendant’s backup tape recovery process proved, in Judge Robart’s words, considerably less straightforward than Mr. Brown represented at oral argument. I just love the mastery of understatement that most judges seem to have. Judge Robart’s footnote four spells out the details. The first vendor defendant hired was unable to retrieve any information from the backup tapes. Oops! The tapes were then returned to defendant, who somehow managed to recover and produce some emails itself. Defendant then hired a second vendor to complete recovery of the emails. After still more delay, this vendor was able to retrieve a subset of the remaining emails. The tapes were once again returned to defendant, who eventually somehow supposedly recovered and produced the rest of the missing emails.

Needless to say, the December 20, 2013, production deadline was not met. In fact, defendant was seven weeks late, and even then, only produced about 3,000 additional emails from the backup tapes. Still, that looked good compared to defendant’s prior ESI search efforts, where it had only produced 110 email strings and 1,270 pages of other documents. After the late production, the court reopened discovery and extended the trial date until November 3, 2014.

The next hearing the court has on e-discovery in this case is a second motion for sanctions filed by plaintiffs just before trial. It is not heard until March 21, 2014. It is another one of those last minute attempts to win a case on e-discovery failures instead of the merits.

But before we go to the grand finale, which I warn you is not as grand as you might expect, here is your second chance to express your opinion. Do you think the defendant intentionally withheld production of the emails? Or do you think it was all just accident and confusion. Maybe the result of legal recreational use or something. This is Seattle after all.

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3 Responses to Fears and Loathing (and Pain) in Seattle: a Case Lesson in How NOT to Preserve and Produce Email – Part One

What strikes me about these cases is how parties and even some lawyers think they can make bad facts better by hiding or changing records. Defensible or somewhat defensible cases become untenable when this happens. This case smacks of lawyers enabling their client’s bad behavior. Both lawyer and client obviously knew how to issue a litigation hold according to the opinion.

The next shoe to drop could be a sledgehammer to the head. I will be waiting to hear.

[…] is part two of a two-part blog, Fears and Loathing (and Pain) in Seattle. Part one is found here. This is not really a Hunter S. Thompson worthy story, but it is Seattle after all. And the name of […]

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About the Blogger

Ralph Losey is a practicing attorney and shareholder in a national law firm with 50+ offices and over 800 lawyers where he is in charge of Electronic Discovery. All opinions expressed here are his own, and not those of his firm or clients. No legal advice is provided on this web and should not be construed as such.

Ralph has long been a leader of the world's tech lawyers. He has presented at hundreds of legal conferences and CLEs around the world. Ralph has written over a million words on e-discovery and tech-law subjects, including five books. He is also the founder of Electronic Discovery Best Practices, and the founder and CEO of e-Discovery TeamTraining, an online education program that arose out of his five years as an adjunct professor teaching e-Discovery and Evidence at the UF School of Law. Ralph is also publisher and principle author of this blog and many other instructional websites.

Ralph has limited his legal practice to electronic discovery and tech law since 2006. He has a special interest in software and the search and review of electronic evidence using artificial intelligence, and also in cybersecurity. Ralph devotes about a month per year on scientific research and experiments in the field of legal search. He is a participant in the 2015 TREC Recall Track and prior to that participated in the EDI Oracle research.

Ralph has been involved with computers, software, legal hacking, and the law since 1980. Ralph has the highest peer AV rating as a lawyer and was selected as a Best Lawyer in America in two categories: Commercial Litigation; and, E-Discovery and Information Management Law, along with other awards. His full biography may be found at RalphLosey.com.

Ralph is also the proud father of two children, Eva Grossman, and Adam Losey, an e-discovery lawyer (married to another e-discovery lawyer, Catherine Losey), and best of all, husband since 1973 to Molly Friedman Losey, a mental health counselor in Winter Park.

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Sedona Principles, 2nd Ed.

1. Electronically stored information is potentially discoverable under Fed. R. Civ. P. 34 or its state equivalents. Organizations must properly preserve electronically stored information that can reasonably be anticipated to be relevant to litigation.

2. When balancing the cost, burden, and need for electronically stored information, courts and parties should apply the proportionality standard embodied in Fed. R. Civ. P. 26(b)(2)(C) and its state equivalents, which require consideration of the technological feasibility and realistic costs of preserving, retrieving, reviewing, and producing electronically stored information, as well as the nature of the litigation and the amount in controversy.

3. Parties should confer early in discovery regarding the preservation and production of electronically stored information when these matters are at issue in the litigation and seek to agree on the scope of each party’s rights and responsibilities.

4. Discovery requests for electronically stored information should be as clear as possible, while responses and objections to discovery should disclose the scope and limits of the production.

5. The obligation to preserve electronically stored information requires reasonable and good faith efforts to retain information that may be relevant to pending or threatened litigation. However, it is unreasonable to expect parties to take every conceivable step to preserve all potentially relevant electronically stored information.

6. Responding parties are best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own electronically stored information.

7. The requesting party has the burden on a motion to compel to show that the responding party’s steps to preserve and produce relevant electronically stored information were inadequate.

8. The primary source of electronically stored information for production should be active data and information. Resort to disaster recovery backup tapes and other sources of electronically stored information that are not reasonably accessible requires the requesting party to demonstrate need and relevance that outweigh the costs and burdens of retrieving and processing the electronically stored information from such sources, including the disruption of business and information management activities.

9. Absent a showing of special need and relevance, a responding party should not be required to preserve, review, or
produce deleted, shadowed, fragmented, or residual electronically stored information.

10. A responding party should follow reasonable procedures to protect privileges and objections in connection with the production of electronically stored information.

11. A responding party may satisfy its good faith obligation to preserve and produce relevant electronically stored information by using electronic tools and processes, such as data sampling, searching, or the use of selection criteria, to identify data reasonably likely to contain relevant information.

12. Absent party agreement or court order specifying the form or forms of production, production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form, taking into account the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party where appropriate or necessary in light of the nature of the information and the needs of the case.

13. Absent a specific objection, party agreement or court order, the reasonable costs of retrieving and reviewing electronically stored information should be borne by the responding party, unless the information sought is not reasonably available to the responding party in the ordinary course of business. If the information sought is not reasonably available to the responding party in the ordinary course of business, then, absent special circumstances, the costs of retrieving and reviewing such electronic information may be shared by or shifted to the requesting party.

14. Sanctions, including spoliation ﬁndings, should be considered by the court only if it finds that there was a clear duty to preserve, a culpable failure to preserve and produce relevant electronically stored information, and a reasonable probability that the loss of the evidence has materially prejudiced the adverse party.